One More Time: Tesla Versus Dealer Association, Texas Style
Apparently, a legal battle must be waged in every state Tesla wants to open one of their boutique showrooms in.
Next up? Texas.
So far, the legal battles have gone fairly well, as Tesla is sporting a perfect 3 and 0 record when fighting various state’s dealership associations for the right to open boutique shops, as well as to sell and service the car separately in the state. (here, here, and here)
This time however, it is a little different, as Tesla is the one looking to change existing franchise laws in Texas, as opposed to blocking new ones, or interpreting old ones.
Specifically, Tesla has introduced bills this month in the Texas Legislature seeking exemptions for electric vehicle makers (who have never had franchisees) to super-cede current restrictions on factory-owned dealerships.
And if that doesn’t sound like a tough enough thing to pass by itself, the Texas Automotive Dealer Association is working as hard as they can to make sure the exemption never happens.
In a piece on the subject with the Automotive News, one company executive calls the proposed change “perhaps the highest barriers in the nation to operating” Tesla’s factory-store model.
And according to Diarmuid O’Connell, who is Tesla’s VP of business development, operating in Texas is “expensive, time consuming…and just ridiculous.”
O’Connell says that although Tesla has two boutique locations in Texas already (Houston and Austin), employees can’t participate in any selling activities, they can’t make a sale, or even give out pricing on any Tesla products.
And if a person in Texas does decide to purchase an all electric Model S sedan, they must contact an out-of-state Tesla representative themselves, and even then, Tesla is not legally permitted to ship the car into the state. The customer is on their own.
Further complicating matters after the sale, if your Tesla vehicle has an issue, Tesla can not legally make an “in warranty” repair…so the customer has to either pay for the repair out of pocket, or drag the car to the next available Tesla service center outside of the state.
“It’s a really, really twisted kind of thing,” said O’Connell, “It’s very hard for Texas folks to acquire a Tesla, ridiculously hard, I think.”
The Texas dealership association has their own opinions why Tesla should not be allowed to sell or service cars in Texas:
“The best way for any manufacturer to retail their vehicles is through great dealers. They’re the ones who know how to retail, who know how to satisfy the customers, and they’re the ones who should be selling the product…To think you should have an exception because you have one electric vehicle is arrogant,” while adding that other OEMs have been working on EVs “for a long time.”
Like changes to legislation in Minnesota sought by that state’s dealership association to block Tesla, experts believe Tesla’s proposal to allow the company to sell EVs in Texas themselves, will also fail.
Proving that keeping the status quo is always the path of least resistance.
Automotive News (sub)